Miners, oil majors drive U.K. higher

Vodafone higher on roll out of consumer 3G services

LONDON (CBS.MW) -- London stocks opened a holiday-shortened week with strong gains Tuesday, as miners recovered about half of last week's losses on a weakening dollar and oil majors surged on record oil prices.

The FTSE 100 index (1805550) rose 1.3 percent at 4,547, while European stocks were lower ahead of a U.S. interest rate decision later in the day. See European markets.

The pound accelerated against the dollar, to $1.7908, on expectations that the Federal Reserve will issue a fairly dovish statement on inflation, and also data showing an expanding British manufacturing sector in April, the tenth month in a row that the survey showed an expanding sector.

The CIPS/Reuters survey also showed supply-side pressures intensifying ahead of a Bank of England meeting on Thursday, where it is expected that interest rates will be hiked from current 4 percent levels. See London Calling.

Mining stock advance

Mining stocks, which were hurt last week on concerns over overheating in the Chinese economy, bounced back on Tuesday, with Anglo American (AAL) rising 3.5 percent and Rio Tinto (TIO) improving 2.5 percent.

Vodafone (VOD)
VOD, +0.68%
rose 1.8 percent after it said it is rolling out its 3G service for consumers in Germany and Portugal, first on a Samsung handset followed shortly by one from the Sony and Ericsson joint venture.

"Extensive consumer trials of Vodafone live! with 3G indicate that early adopters are keen to try this technology and so we are giving them a taste of it prior to the full launch of enhanced services later in the year," Vodafone said.

Vodafone said it will roll out the service in other countries in the coming months.

Vodafone had previously rolled out a 3G service -- which allows for data connections comparable to ADSL levels -- for business customers only. Hutchison Whampoa's 3 service was the first in Europe to offer 3G on handsets to consumers.

But shares of U.K. mobile operator Mmo2 (OOM) ended flat in heavy trade, as The Times (of London) reported that Bear Stearns has said the company has overstated its average revenue per user (ARPU) figures.

The Bear Stearns note says ARPU, which is closely watched by investors, is overstated by 8.7 percent in the year to March 2004 because O2 includes the ongoing fee paid away to distributors and gross proceeds from third-party content, unlike competitors. O2 told the newspaper it does not dispute Bear Stearns' analysis, but says that analysts are aware of the reporting difference.

Shares of fixed-line telecom BT (BT.A)
BTY, -2.08%
was 0.6 percent lower after inking a seven-year, $1.5 billion partnership with Hewlett-Packard. The shares had been weak prior to the H-P announcement.

Banking sector M&A talk

Financials in London paced the advance, with HSBC (HSBA)
HBC, +0.29%
up 1.9 percent and HBOS (HBOS) rising 1.4 percent.

C&C Group, a manufacturer, marketer and distributor of branded beverages in Ireland and Northern Ireland and snacks in Ireland, said it will raise around 440 million euros in an IPO in London and Dublin, at an indicative price range of 2.26 euros to 2.74 euros per share.

Conditional dealing will start May 14, with unconditional dealings starting May 19.

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